STRATEGIC MANAGEMENT CASE STUDIES

Q: 1. DD is the Indias premier public service broadcaster

with more than 1,000 transmitters covering 90% of the
countrys population across an estimated 70 million
homes. It has more than 20,000 employees managing its
metro and regional channels. Recent years have seen
growing competition from many private channels
numbering more than 65, and the cable and satellite
operators (C & S). The C & S network reaches nearly 30
million homes and is growing at a very fast rate.
DDs business model is based on selling half-hour slots of
commercial time to the programme producers and
charging them a minimum guarantee. For instance, the
present tariff for the first 20 episodes of a programme is
Rs. 30 lakhs plus the cost of production of the
programme. In exchange the producers get 780 seconds
of commercial time that he can sell to advertisers and can
generate revenue. Break-even point for producers, at the
present rates, thus is Rs. 75,000 for a 10 second
advertising spot. Beyond 20 episodes, the minimum
guarantee is Rs. 65 lakhs for which the producer has to
charge Rs. 1,15,000 for a 10 second spot in order to
break-even. It is at this point the advertisers face a
problem the competitive rates for a 10 second spot is
Rs. 50,000. Producers are possessive about buying
commercial time on DD. As a result the DDs projected
growth of revenue is only 6-10% as against 50-60% for
the private sector channels. Software suppliers,
advertisers and audiences are deserting DD owing to its
unrealistic pricing policy. DD has three options before it.
First, it should privatize, second, it should remain purely
public service broadcaster and third, a middle path. The
challenge seems to be to exploit DDs immense potential
and emerge as a formidable player in the mass media.
(i) What is the best option, in your view, for DD?
(ii) Analyse the SWOT factors the DD has.
(iii) Why do you think that the proposed alternative is
the best?
(20 Marks)
Answer

i. For several years Doordarshan was the only

broadcaster
ii. of television programmes in India. After the opening
of the sector to the private entrepreneur (cable and
satellite channels), the market has witnessed major
changes. The number of channels has increased and
also the quality of programmes, backed by
technology, has improved. In terms of quality of
programmers, opportunity to advertise, outreach
activities, the broadcasting has become a popular
business. Broadcasters too have realised the great
business potential in the market. But for this, policies
need to be rationalised and be opened to the scope
of innovativeness not only in term of quality of
programmes. This would not come by simply going
to more areas or by allowing bureaucratic set up to
continue in the organisation. Strategically the DD
needs to undergo a policy overhaul. DD, out of three
options,
namely privatisation,
public
service
broadcaster or a middle path, can choose the third
one, i.e. a combination of both. The whole
privatisation is not possible under the diversified
political scenario. Nor it would be desirable to hand
over the broadcasting emotively in the private hand
as it proves to be a great means of communication
of many socially oriented public programmers. The
government could also think in term of creating a
corporation (as it did by creating Prasar Bharti) and
provide reasonable autonomy to DD. So far as its
advertisement tariff is concerned that can be made
fairly competitive. However, at the same time cost of
advertising is to be compared with the reach enjoyed
by the Doordarshan. The number of viewers may be
far more to justify higher tariffs.

ii. The SWOT analysis involves study of strengths,

weaknesses, opportunities and threats of an organisation.
SWOT factors that are evidently available to the
Doordarshan are as follows:
S Strength
More than 1000 transmitters covering 90% of population
across 70 million homes against only 30 million homes by
C & S. More than 20,000 employees.

W Weakness
Rigid pricing strategy. Low credibility with certain sections
of society. Quality of programs is not as good as
compared to C & S network
O Opportunities
Infrastructure can be leased out to cable and satellite
channel. Digital terrestrial transmission. Regional focused
channels. Allotment of time, slots to other broadcasters.
T Threats
Desertion of advertisers and producers may result in loss
of revenues. Due to quality of program the reach of C & S
network is continuously expanding. As the C & S network
need the trained staff, some employees of DD may
switchover and take new jobs. Best of the markettechnology is being used by the private channels.
iii.
It is suggested that the DD should adopt a
middle path. It should have a mix of both the
options. It should economise on its operational
aspects and ensure more productivity in term of
revenue generation and optimisation of use of its
infrastructure.
Wherever,
the
capacities
are
underutilised, these may be leased out to the private
operations. At the same time quality and viewership
of programmes should be improved. Bureaucracy
may reduce new strategic initiatives or make the
organisation less transparent. Complete privatisation
can fetch a good sum and may solve many of the
managerial and operational problems. However,
complete public monopoly is not advisable because
that denies the government to fully exploit the
avenue for social and public use. The government
will also lose out as it will not be able to take
advantage of rising potential of the market.